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Kliuless? Gaming Industry ICYMI #7

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Hi, my name is Kenny Liu, and I work in Revenue Strategy at Riot Games. Each week I compile a gaming industry insights newsletter that I share with other Rioters, including Riot’s senior leadership. This edition is the public version that I publish broadly every week as well. Opinions are mine.

Epic Games made two interesting announcements this week; though seemingly unrelated, they both aim to help protect Fortnite from their most formidable competition to date

The first is their decision to bring a physical Fortnite bundle to store shelves for the holidays, in partnership with Warner Bros.

The second is their announcement of a new limited time Support-A-Creator Event, which effectively gives away up to 5% of their profit margin to influencers (assuming 100% participation of players as supporting fans)

In the short-term both of these initiatives will be margin-destructive for this quarter, but these plays have been made by Epic with the long game in mind

With a Nielsen awareness score of 99/100, Call of Duty: Black Ops 4 is the most anticipated game this holiday, and Activision's big bet represents the greatest existential threat to date for existing battle royale leaders, Fortnite and PUBG

Though Blackout will likely cannibalize PUBG much more than Fortnite (due to greater similarities across art, design, pricing, etc.), I think it is still smart for Epic to strategize mitigating any potential player flight risk

Yes, Epic could have made some more revenue-maximizing optimizations on their specific tactical executions, but giving up ~5% of revenue for a quarter may not seem too steep a price to pay for an additional layer of protection from unlucky possibilities

Under a milder scenario, Fortnite might lose a subset of their players, which would have effectively cut off the otherwise very lucrative (years-)long tail of these players' total lifetime value

Much worse would be an unlikely but catastrophic black swan event where Blackout seizes Fortnite's throne

New Yorker: The relative plausibility of impossible beings tells you a lot about how the mind works

"Patterns of evidence, a grasp of biology, theories of physics: as it turns out, we need all of these to account for our intuitions about supernatural beings, just as we need all of them to explain any other complex cultural phenomenon, from a tennis match to a bar fight to a bluegrass band"